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Regulated Online Poker in California Dead on Arrival for 2018

The latest California lawmaker to take up online poker regulation in the Golden State is waving the white flag for 2018.

In an interview with Matthew Kredell of the Online Poker Report, assemblyman Reggie Jones-Sawyer (D-59) confirmed that he would allow the February 16 deadline to introduce legislation lapse without putting an online poker bill forward.

Last year Jones-Sawyer reintroduced Assembly Bill 1677, also known as the Internet Poker Consumer Protection Act, marking his fourth consecutive year in the legislature’s iGaming arena. But unlike his previous efforts, Jones-Sawyer readily admitted that AB-1677 was designed to generate discussion rather than achieve actual passage.

Jones-Sawyer told Kredell that those discussions would continue throughout 2018, but the bill would be shelved for the year to let lawmakers clear the air:

“We’ve gone through extensive research and a really robust discussion talking to proponents and opponents. The process was very contentious, and some people still need some time to heal.

The best thing that came out of those discussions was the fact that we were discussing it. People were very open and honest about their feelings for online poker.

I think we provided, here in our office, a safe place to express their feelings.”

The call for a year of “healing” echoed Jones-Sawyer’s sentiments from last year, when he used the same word while urging colleagues to rebuild the bridges burned during 2016’s highly contentious debate.

In 2016, assemblyman Adam Gray – a longtime advocate for iGaming legalization in California and chair of the Governmental Organization Committee – partnered with Jones-Sawyer to co-sponsor AB-2863. This iteration of online poker legislation, an issue which has been introduced by the California Legislature every year since 2008, was the first to secure approval from the state’s horse racing industry.

Despite achieving this crucial milestone, Gray blundered when confronted with the longstanding issue of suitability.

California’s powerful tribal gaming operators remained decidedly split on PokerStars’ potential reentrance to the market. As the leading coalition of tribes called for a mandatory ban on so-called “bad actors” – or online poker operators that continued to serve customers in the state even after the federal government authorized the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2016 – another smaller alliance of tribes and card rooms came together to support PokerStars’ interests.

Gray initially opposed any mandatory bans on bad actors like PokerStars – which was accused of gaining an unfair advantage in the marketplace by illegally operating there while competitors like PartyPoker departed the U.S. industry post-UIGEA.

Gray wrote AB-2863’s bad actor clause to offer the global poker site a $20 million penalty fee or a five-year exclusion. But rather than remain firm, Gray buckled to anti-PokerStars pressure and amended the bill to include a mandatory five-year ban. This reversal predictably drew the ire of the pro-PokerStars coalition, and soon enough the debate descended into acrimony and inaction.

During the last decade of fruitless debate in California, four states have successfully legalized online poker. Nevada, New Jersey, and Delaware launched their iGaming industries in 2013, while Pennsylvania is preparing to go live this summer after passing comprehensive legislation late last year.

Kredell asked Jones-Sawyer about the risk of falling behind a longer list of iGaming-ready states given the 2018 hiatus, but the experienced lawmaker said California could benefit from a delay before returning in earnest in 2019:

“I think, ultimately, the good thing to come out of waiting is we will learn from other states that have passed it and figure out a better way to get it done.

Even though other states started ahead of us, I believe not only will we catch up but pass them in a short period of time in terms of the amount of revenue, and the system we set up will be much better than any other state.”